Friday, August 10, 2012

Knight
Capital Group Inc.(NYSE:KCG), in a note sent to its clients, has said that it
is conferring with experts outside to provide it additional help in the review
of the incident last week where its trading software went awry.

In
the middle of the trading week, market maker Knight Capital's trading software
punched in wayward orders that sent prices wildly swinging and wiped out the
company’s capital. The company sustained losses of $400 million, nearly four
times of what the company earned in 2011.

Knight
Capital's Chief Executive Thomas Joyce told his clients that safeguards had
been put in place so that repeat of that incident does not occur.

In
his note to clients Joyce wrote, "We are in discussions with external
advisers in an effort to effectively assess the situation, in addition to our
internal review."

Joyce
also informed that after taxes the net loss to the company as a result of the
episode would be of the order of $270 million.

On
Thursday Knight Capital's shares, valued at $309 million, closed down 2.85
percent at $3.07 on the NYSE.

Dow
Jones in its Market Watch section reported that a Knight spokeswoman confirmed
the email but said that no decision had yet been taken regarding an outside
firm coming in to review the technology problem.

That
episode has sent jitters throughout the trading community, as they now start to
worry about computer trading.